Tag Articles: Royal Bank of Canada

Royal Bank of Canada – Tar Sands Financing

WHEREAS

RBC’s 2009 Environmental Blueprint believes that “preservation of the environment is fundamental to the sustainability of our communities, our clients and our company.”

This document recognizes that “it is of vital importance that we all contribute to efforts to reduce greenhouse gas emissions” and that “the identity, cultural beliefs and economies of some indigenous peoples are intrinsically tied to their region’s history, biodiversity and natural landscapes” and that “financial institutions should play a role in supporting efforts to address global water issues.”

Notwithstanding these policy commitments, RBC is among the largest financiers of companies engaged in oil sands operations in the Canadian boreal forest region. Oil sands extraction presents a unique set of resource-intensive environmental challenges, including heavy water use, land disturbance, toxic waste storage, and emission of air pollutants. These impacts, along with their implications for local residents and wildlife, can introduce market risks and legal, regulatory and reputational problems to bank clients.

These impacts and risks include:

  • Alberta’s oil sands are Canada’s fastest growing contributor to global warming emissions, and the largest emitter of industrial pollutants. Cumulative greenhouse gas emissions (GHGs) from Alberta’s oil sands are increasing fast. They more than doubled between 1990 and 2008, and if growth proceeds as planned, will triple from 2008 levels by 2020.
  • Volatile oil prices and changing oil demand can impact operational costs, income and overall financial health.
  • Industrial logging and oil sands have reduced the boreal to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species. According to the Canadian Parks and Wildness Association, it will take more than 300 years before reclaimed areas become functioning forest again.
  • The industry has not proven that full reclamation of toxic tailing ponds is possible. The long-term presence of these ponds, which have been shown to leak toxic pollutants into local water sources, presents additional challenges.
  • Extracting one barrel of bitumen requires 2-5 barrels of fresh water and enough natural gas to heat a Canadian home for 1.5-5.5 days; four tons of earth are removed. While processed sand must be replaced and the site reclaimed, in 40+ years of oil sands operations, just one acre has received a reclamation certificate from the Canadian government.
  • Litigation from First Nations presents possible problems to clients engaged in oil sands extraction and related infrastructure, which may result in increased costs and restrictions on development. Even after approved, a project can be subject to lawsuits.

RESOLVED

 

Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the financial risks associated with RBC’s financial exposure to expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these relationships and should be available to investors by October 1, 2011.

Royal Bank of Canada

200 Bay StreetRoyal Bank Plaza
Toronto, ON M5J 2J5
Canada

http://www.royalbank.com/

by Natasha Lamb, MBA

With all of the turmoil in the financial sector over the past year, one major bank has managed to avoid any bombshells to date – Royal Bank of Canada (NYSE – RBC). It happens to be one of the world’s best managed banks with respect to sustainability issues, and its stock has held up remarkably well. It is down about half as much as the S&P 500 financial sector over the past year (-27 percent versus -56 percent).

Royal Bank of Canada is a diversified financial services company. It is Canada’s largest bank by assets and market capitalization and the largest mutual fund provider. Canada accounts for about 66 percent of revenues, the US 22 percent, and international 12 percent. RBC’s strategy includes expansion in the U.S. market and building critical mass in key businesses. RBC is also focused on growing its new Wealth Management segment. It is well positioned to take advantage of a fragmented global wealth management industry.

Royal Bank of Canada is the North American sector leader in sustainability according to Innovest. The company was ranked first in Newsweek’s “Global 100 Greenest Companies.” Environmental and social factors are integrated throughout the company’s business lines, allowing the company to mitigate risk and identify strategic profit opportunities. The company has had an environmental policy in place for more than 15 years, has a Climate Risk Program to monitor risks in its portfolio, is a signatory to the Equator Principles, and uses an intranet tool, Climate Change Central, to allow employees to examine the environmental impacts of their actions.

The company has invested in more than two dozen wind projects, and invests directly in the Global Environment Fund Clean Tech Fund, a private equity fund that finances technologies to reduce the environmental impact of traditional industrial companies.

Portfolio Profiles are not recommendations for any investment action. They are intended expressly to provide social, environmental and business information on companies that may appear in Trillium Asset Management Corporation client portfolios. Clients and/or employees of Trillium may own this stock.